JERUSALEM (AFP) - Israel Prime Minister Ariel Sharon will meet new
Palestinian leader Mahmud Abbas in two weeks, a Palestinian official
said as the two sides prepared to discuss the transfer of security
control in parts of the West Bank, fueling real optimism about
progress towards peace.

The power transfer is due to take place following a first meeting
Abbas and Sharon, the latest in a series of peace gestures between
Israeli and the Palestinians amid a lull in violence.

"This meeting should take place a fortnight from now," said prime
minister Ahmed Qorei´s top aide Hassan Abu Libdeh.

Abbas met Sharon when he was prime minister in 2003 but the proposed
summit would be the first between Israeli and Palestinian leaders in
over four years.

Backed by his top allies in Washington, Sharon refused to have
anything to do with Abbas´s late predecessor, Yasser Arafat.

But in a major policy shift, Israel has called off offensive
operations in the Gaza Strip after 2,000 Palestinian troops were
deployed in the south and centre of the territory with orders to halt
rocket attacks.

"This is a far-reaching step on our part, the biggest gesture since
the start of the intifada, in the hope we might be able to turn a new
page with the Palestinians," Israeli government spokesman Avi Pazner
said Friday.

Abbas, on his first foreign trip as leader, briefed Egyptian
President Hosni Mubarak on Saturday on efforts to secure a formal
truce from militant groups to cement a recent informal lull in anti-
Israeli attacks.

His order that Palestinian forces stop militant attacks across Gaza
led even Sharon to hail a possible "historic breakthrough" in
relations.

Late Saturday, former Palestinian security minister Mohammed Dahlan
was due to hold talks in Tel Aviv with Israeli Defence Minister Shaul
Mofaz on West Bank security, Palestinian sources said.

On the agenda was a possible halt to Israeli military operations in
the West Bank and the release of some of the 8,000 Palestinians
jailed in Israel, amid reports that officials are ready to free a
first tranche of 900.

Sharon is also now prepared to coordinate with the Palestinians his
plan to pull all troops and 8,000 settlers out of the Gaza Strip this
year.

The United States sent special envoy William Burns to prepare the
ground for a visit by new Secretary of State Condoleezza Rice at the
end of next week.

Burns also detected "the best chance in years" for the peace process.

Despite the overall calm in the occupied territories, a mentally
handicapped Palestinian man died after being shot by Israeli soldiers
in southern Gaza on Friday, hospital sources said.

Washington also still regards the Islamic militant group Hamas as a
terror organisation, despite its victory in local Gaza elections on
Thursday, winning 77 out of 118 seats, against just 26 for Abbas´s
Fatah faction.

Since the 1991 launch of the peace process, the most taxing questions
have remained on hold: permanent borders, Jewish settlements,
Palestinian refugees, water resources and the fate of Jerusalem.

In Cairo, Abbas met Mubarak on his efforts for a definitive
demilitarization of the Palestinian uprising that erupted in
September 2000 against the 38-year Israeli occupation.

Cairo has declared its readiness to send an additional 700 border
guards to tighten security on its border with Gaza, in the wake of
the Israeli pullout.